California Appellate Courts Hold Statutory Immunity Bars Treble Damages Claims

California Appellate Courts Hold Statutory Immunity Bars Treble Damages Claims

 

California enacted Assembly Bill-218 on October 14, 2019, amending Code of Civil Procedure section 340.1.  In doing so, California greatly expanded damages awards available to childhood sexual assault victims, including treble damages against entities that engage in “covering up” childhood sexual assault.[i]  One of the principal byproducts of the reform legislation is treble damages claims may be erroneously asserted against public school districts in childhood sexual assault cases.  In two recent decisions, California’s appellate courts have vigorously reaffirmed the traditional rule that statutory sovereign immunity under Government Code section 818 bars liability for treble damages claims brought against public entities under Code of Civil Procedure section 340.1.

 

Los Angeles Unified School District v. Superior Court of Los Angeles County

 In Los Angeles Unified School District (LAUSD) v. Superior Court of Los Angeles County, plaintiff Jane Doe contended she was sexually assaulted by an LAUSD employee and LAUSD caused it by covering up its employee’s previous assault of another student.[ii]  Doe requested an award of treble damages under section 340.1, and LAUSD moved for an order striking the treble damages claim – arguing that, as a public entity, LAUSD is statutorily immune from damages “imposed primarily for the sake of example and by way of punishing the defendant.”  The trial court denied LAUSD’s motion to strike on the grounds the newly amended section 340.1 serves to compensate victims, and nothing in the legislative history shows any intent to interpret treble damages as punishment.  LAUSD petitioned for a writ of mandate seeking to vacate the trial court’s order, which was granted by the Court of Appeal, Second District, Division Three.

 

Economic and Noneconomic Damages Fully Compensate a Plaintiff; Treble Damages are “in addition” to Actual Damages and Therefore Do Not Serve a Compensatory Function

In an opinion published on May 21, 2021, Justice Anne H. Egerton concluded the function and purpose of the treble damages provision in section 340.1 is primarily to punish and deter defendants who cover up sexual abuse, and not to compensate victims.  Justice Egerton writes:  “Plaintiff does not identify any injury from covering up a childhood sexual assault for which normal tort damages fail to provide full compensation….[Because damages in tort allow a plaintiff to fully recover for all detriment caused by an injury,]…treble damages are, by definition, in addition to a plaintiff’s actual damages…. [Consequently, the treble damages provision in section 340.1 does not serve a compensatory function, and] absent a compensatory function, punitive damages are just that – simply and solely punitive – under section 818.”  Thus, the Court of Appeal held that section 818’s prohibition on punitive damages against a public entity bars an award of statutory treble damage under section 340.1.

 

X.M. v. Superior Court of San Bernardino County

In X.M. v. Superior Court of San Bernardino County, (2021) 68 Cal. App. 5th 1014, plaintiff X.M. alleged he was sexually assaulted on school campus by a janitor, and that this assault resulted from Hesperian Unified School District’s (“HUSD”) cover-up of a prior sexual assault by the same employee.[iii]  X.M. asserted a claim for treble damages under section 340.1. HUSD moved for and received the trial court’s order striking the treble-damages claim on the ground that treble damages under section 340.1 are primarily punitive, and therefore barred by section 818.  X.M. petitioned for a writ of mandate seeking to vacate the trial court’s order and conclude section 818’s immunity does not apply to the treble damages provision of section 340.1.  The Fourth District Court of Appeal, Division 2, granted the petition and held section 818’s statutory prohibition against punitive damages awards against public agencies barred plaintiff’s treble damages claim.

 

The Statutory Text and Legislative History of C.C.P. Section 340.1 Support the Interpretation that its Treble Damages Provision is Primarily Punitive

In an opinion published on September 16, 2021, Justice Marsha G. Slough concluded that section 340.1’s treble damages provision is “primarily punitive,” and this interpretation is supported by section 340.1’s statutory text and legislative history.  Justice Slough writes that the last clause of section 340.1 is an “exception provision,” a recognition that treble damages may not be available in every circumstance depending on the operation of other laws.  The treble damages provision reads in relevant part: “A person who is sexually assaulted and proves it was as the result of a cover up may recover up to treble damages against a defendant who is found to have covered up the sexual assault of a minor, unless prohibited by another law…[The critical question of statutory interpretation is whether] section 818 is ‘another law’ that prohibits treble damages, thus triggering section 340.1’s exception clause?”

While the statute is silent as to the intended purpose of the increased damages award, Justice Slough opines the design of section 340.1’s treble damages provision “bears the hallmarks of punitive damages.”  This includes proof of offensive behavior, placing the decision of whether to award increased damages entirely with the factfinder, and authorizing the factfinder to award up to three times the actual damages based on factors specific to the defendant.  Because the design of section 340.1 shares punitive traits common to other punitive damages provisions, this indicates the primary purpose of 340.1’s treble damages provision is punitive, i.e., it is primarily aimed at retribution and deterrence.  By contrast, nothing in the statutory text of section 340.1 indicates compensation is the primary function of the treble damages provision.

Justice Slough notes that her interpretation of the treble damages provision is supported by section 340.1’s legislative history.  In a statement attributed to AB-218’s author, Assemblywoman Lorena Gonzalez, the function and purpose of AB-218 is described thus: “[t]his reform is clearly needed both to compensate victims who should never have been victims and would not have been if past sexual assault had been properly brought to light- and also as an effective deterrent against individuals and entities who have chosen to protect the perpetrators of sexual assault over the victims.”  Justice Slough concludes that where the intended purpose of the expanded statute of limitations period is compensatory “because they ensure more victims have their day in court,” the intended purpose of the treble damages provision is punitive, “because the potential of an increased award incentivizes victims to come forward and sue those engaged in cover ups, thereby deterring such conduct.

Finally, Justice Slough agrees that punishing cover ups of childhood sexual assault and deterring cover-ups is a worthy public policy objective, but these objectives are not advanced by waiving statutory immunity under Government Code section 818.

[T]he rationale behind section 818’s immunity is that the twin goals of punitive damages—retribution and deterrence—are not advanced if the defendant is a public agency and the tort is committed by an individual employee…Under ordinary principles of retribution, it is the wrongdoer himself who is made to suffer for his unlawful conduct. A municipality, however, can have no malice independent of the malice of its officials. Damages awarded for punitive purposes, therefore, are not sensibly assessed against the governmental entity itself.

The goals of retribution and deterrence are not served by awarding treble damages against a public entity because “an award of punitive damages against a municipality ‘punishes’ only the taxpayers, who took no part in the commission of the tort.”

 

The Take-Away

The LAUSD and X.M. cases signify major developments on the applicability of statutory sovereign immunity under Government Code section 818 to defeat treble damages claims brought under Code of Civil Procedure section 340.1.  Because of the sharp rise in sexual assault lawsuits hitting public school districts since 2019, the importance of preserving statutory sovereign immunity for public entities cannot be overstated.  Counsel representing public entities should consider moving to strike claims for treble damages at the pleading stage and remain vigilant of the frequent developments in this area of law.  Doing so will foster reasonable resolutions and reduce the risk of the dreaded nuclear verdict.

 

 

 



[i] Code Civ. Proc. § 340.1, subd. (b)(1).

[ii] Los Angeles Unified School District v. Superior Court of Los Angeles County (2021) 64 Cal. App. 5th 549, 279 Cal. Rptr. 3d 52 390.

[iii] X.M. v. Superior Court of San Bernardino County, (2021) 68 Cal. App. 5th 1014.

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